Sunday, November 10, 2019

Do you know how to use that thing?

Simple question: if you could afford, say, an F-35 but your tactics, techniques and procedures were all still firmly rooted in the old Mirage III era, would you be significantly better off buying the new jet? 
Let’s turn that around: if you’re operating a 4th generation fighter and need to bite chunks out of a thoroughly modern air force, but can’t afford to buy 5th generation aircraft, what do you do?
You might find that a well-flown 4th generation fighter will defeat a badly flown 5th generation fighter. And that may be because the Tactics, Techniques and Procedures (TTPs) and enabling technologies you adopt give you an operational advantage. 
That tells us there’s no point in buying new kit unless you understand what you’re able to do with it, and change your TTPs accordingly. This is one of the challenges for innovators, and it’s not specifically a Defence problem – it’s general.
Expanding the topic slightly, the competitiveness of an organisation derives partly from its equipment (F-35s, M1A1 Abrams, etc) or products (price, quality, capability), and partly from its leadership and management. 
The most obvious example is the Battle of Britain. The Luftwaffe’s Messerschmitt Bf109s, and the tactics of their pilots, were superior to those of the Hurricane squadrons they encountered in battle; the Spitfire was a match for the Bf109 but the Royal Air Force was short of these, so on paper the force imbalance was significantly in the Luftwaffe’s favour. 
But the RAF leadership had invested pre-war in several game-changing innovations. As well as its aircraft, it enjoyed superior situational awareness, thanks to radar and a new command and control system that made best use of the knowledge and assets available to it. These, together, made possible a winning strategy. 
It was the intangibles that proved decisive: strategy, situational awareness, command and control, and tactics. These were disruptive innovations that changed air fighting for generations. And they were enterprise-level innovations: the RAF changed itself to exploit them. 
When assessing supposedly innovative products many commentators mistakenly ignore those intangibles and their contextual relevance and focus purely on the performance of the equipment in question. 
Incremental innovation can give you an increase in performance, and so a combat edge in an existing environment, without your needing to change fundamentally what you do. Think Spitfire over Hurricane, or M1A1 Abrams over Leopard 1.
Disruptive innovation, on the other hand, enables (or forces) you to completely change how you do things. Think terrorist IEDs and the effect these had on Coalition tactics and equipment in Iraq and Afghanistan. Think F-22, F-35 and AEW&C and their game-changing effect on how air battles are fought. Think dismounted combat in Afghanistan and the emergence of Diggerworks.
Think Boeing’s Loyal Wingman – what do stealth, autonomous systems and AI, in partnership with a manned combat aircraft, allow you do that you couldn’t before?  Imagine the fun smart kids from the RAAF, industry and the universities will have working out how you can use that killer combination of technologies to completely change the nature of air warfare. That’s disruptive, enterprise-level innovation.
One of America’s innovation gurus, Clayton Christensen, points out that disruptive innovations create new markets (The Innovator’s Dilemma; Google it). The new markets behave and reward players differently. Established players lack the agility, smarts and structures to be competitive in these new markets, even if they have access to the same technology.
The same goes for warfare and conflict, or competition between nations and blocs (look back at this year’s ASPI International Conference: War in 2025). New players are developing different threats and employing them in novel ways. While traditional state v state warfare still demands old-fashioned, industrial-era deterrent and defence capabilities, Political Warfare, Hybrid Warfare, ‘Grey Zone’ operations and brazen cyber assault demand a different set of TTPs – they force disruptive, enterprise-level innovation upon us. 
This is the challenge facing defence sector innovators: improving significantly what you’ve got takes innovation and hard work, but may not change fundamentally what you do. Disruptive innovation is more fundamental than just new technology – it means imagining (or adapting to) a very different reality and some very different outcomes. It means creating the mental freedom for this to happen in the first place. 
It means Defence, the universities and industry looking inside each other’s heads as well as inside their own, and ignoring conventional wisdom and vested interests. 

Wednesday, October 16, 2019

Innovation: You're not a snowflake

So, you’re in the defence industry. That means you’re unique, right? Wrong!

It’s easy to assume the defence industry is unique: you’ve got sexy, high-tech equipment that only government employees are allowed to operate (legally, at least); wicked operational requirements; (almost) impossibly high standards for quality and precision; and stuff that’s not only dangerous in itself, it’s actually designed to kill other people. 
Wait a moment, though: we’re talking about high-technology engineered products and services. What’s so different about the design and engineering processes that deliver, say, a jet fighter and an airliner? Or a main battle tank and a high-performance sports car? Or a mine-hunting submersible and a remotely operated container terminal? 
When you look at the hardware, the services and the organisations that create and deliver them, the defence industry isn’t actually that different from any other high-technology sector, whether it’s bio-technology, software, AI, machine tools, offshore oil and gas, advanced manufacturing or cyber security. It’s not the technologies that are different – it’s the markets, and the way they operate.
Is that a good or a bad thing? Actually, in some ways it’s a good thing. It means the defence sector, which is surprisingly poorly studied and documented, can learn from the non-defence sector, which has been studied and analysed exhaustively.
If you want to be a successful defence equipment manufacturer, you need to embody the attributes and behaviours of successful manufacturers of machine tools, or medical equipment, or airliners, or ATMs.
And that applies to innovation, as well: the drive to innovate, the techniques for unlocking the innovativeness in your organisation and the tools you use to make your innovations relevant and effective are just the same. Google ‘industrial innovation’: you’ll learn lots about non-defence companies that you can apply directly to your work in the defence sector.
Adjacent Markets
That market thing’s a bit of a killer, though, isn’t it? What exactly are the differences between Defence and just about all of the other markets, and do they matter?
The obvious difference is that Defence is a monopsony – it’s the only domestic customer for your goods and services, so its acquisition and sustainment budgets and policies absolutely define the size and behaviour of the market, including its appetite for Innovation, and the barriers to entry. It's not like Australia Post is going to buy Land 400 vehicles.
Defence is also monopolistic. It’s reasonable to talk about a 30% or 50% or 70% share of the national market for MRI machines, or 3-axis milling machines, or diabetes blood testers. And there’s usually constant demand to stimulate the incremental and disruptive innovation that keeps products and companies competitive. 
But when you’re talking advanced jet trainers or infantry fighting vehicles your market share is typically either 100 per cent, or zero. And you won’t get a chance to re-compete for 30 years, by which time user requirements and technology will have changed beyond recognition – both you and the customer are forced to think disruptively. 
Thirdly, Defence does anything really important in secret. Defence’s need and appetite for innovation is determined by a community of expert practitioners whose perceptions of threats, opportunities and needs are based partially on knowledge and assumptions that aren’t necessarily made public. Hypersonics is a good example. 
None of this really matters if you have privileged access to your allies’ equipment and intelligence, and can afford not to worry about the local industry base. But now that the health and innovativeness of our industry base is an issue for Defence, industry policy needs to address both the quantity and quality of work cycling through Australian industry. 
Local firms must innovate to satisfy a demanding and choosy customer and Defence industry policy needs to help create a business environment and culture in which innovation flourishes.
This train of logic has led us to where we are today. Our defence industry policy now embraces innovation, and Defence and the ADF are trying to create an innovation culture that can both meet the ADF’s needs and help industry and the research sector. 
The big challenge is to overlay this innovation culture on a conservative, risk-averse acquisition and enterprise management system. At its core, when billions of dollars are at stake, that system probably won’t change much – innovators need to understand that, and how the system works. Why? Because that’s how this market works.
For all that Defence is trying to close the gap that’s traditionally existed between itself and industry, it’s still up to industry to understand better how Defence works, both in acquisition and innovation, in order to prosper in this market. And to apply the abundant lessons from the non-defence market.

Monday, September 16, 2019

Creating an innovation culture

Thanks once again to ADM and its Editor, Katherine Ziesing, for giving me the space for another short column in ADM's September edition on defence innovation - this time looking at the innovation culture. I'd like to shout out to Defence's Chief Information Oficer Group (CIOG), whose Directorate of Innovation has done some deep thinking on this and come up with a definition of an Innovation Culture that would serve many different types of organisation. Thanks also to CIOG for the OK to share their insights.

Supporting an innovation culture

INTRO: Hey, you’re going to ‘Innovate’, and grow an ‘Innovation Culture’. Great! But what does that actually mean?
Gregor FergusonSydney
There’s not a Defence-wide definition of an ‘innovation culture’, any more than there is an industry-wide one. Don’t say I told you, but the Director Innovation in CIOG has developed a really good definition that I think is worth sharing. It lists the four Key Innovation Values of CollaborationLearning - fostering a culture of learning over just knowing, or not;Passion believing in what you’re doing; and Impact what effect, what changes, will result from implementing an innovation? (If they’re not worth the effort, then the ‘innovation’ may not be very innovative.) 
Importantly, it acknowledges the imperfection of reality and the value of timing: innovation requires us to be timely, not perfect, in our solutions. Any soldier, or salesman, would agree.
How does the culture manifest itself in an organisation? Again, CIOG has thought about this. It acknowledges the risk and uncertainty that are part of the innovation process, and the need to manage failure – both actual and incipient – and learn from it; it acknowledges the vital role of a committed leader, and of champions in both the innovating organisations and their customers. 
There’s a circular argument here: does introducing an innovation culture change an organisation, or do you need to change an organisation in order for an innovation culture to flourish? A bit of both, in my view. The key is a leadership that’s invested in the innovation process and the outcomes it can deliver. In practical terms, CIOG reckons an innovation culture enables or provides:
·     Access to Safe Spaces: both virtual and physical, to take calculated risks and explore
·     Time Autonomy: Time allocated for innovation and experimentation without being micromanaged
·     Recognition: Leaders recognising the contribution of innovators 
·     Collaboration: Working outside silos for effective innovation.
·     Multidisciplinary: Diversity of thought and experience for individuals and teams 
·     Playful Discovery: fostering creativity through gamified processes or tactile exploration.
·     Champions: Role models for innovation, including organisation leaders, who are invested in furthering the innovation agenda.
·     Future Thinking: Ensuring that the future is a key consideration in the present-day problem-solving process. 
This is a good cultural blueprint for any organisation looking to enhance its business processes, efficiency and competitiveness. Helpfully, some Australian universities have explored this cultural space in depth – industry can learn from them, if it chooses. 
The literature on innovation throws up some persistent lessons: supportive leadership is one; being a subject matter expert on what you’re doing is another; and customer knowledge is a third.
Leadership is absolutely vital: it’s leaders who (should) set the tone of the organisation and the expectations of its customers and staff; who (should) introduce an innovation culture into an organisation and sustain it; and who (should) arrange things so that innovators can help the organisation (a manufacturing company, an air force, a law firm, or a pizza shop) to flourish. If they decide to innovate, good leaders can bring the organisation with them; if they don’t choose to innovate or, worse, choose notto innovate, the organisation is likely to stagnate. 
But it’s important to look outside the organisation. Customer knowledge is the product of customer engagement. For companies producing goods or services in a highly competitive market, the more they understand their customers and end users, the better. 
Defence is working the engagement issue as a customer, but is understandably reticent about revealing apparent weaknesses and pain points, even to trusted industry players. But Defence’s innovation processes do acknowledge that engagement is important, not least because Defence leaders don’t always know what they don’t know and nor do industry and academic leaders, so they all need to be open to each other’s insights.
For many SMEs the customer might be Defence, and the end-user a member of the ADF, but the customer’s more likely to be a bigger company higher up the supply chain. Regardless, a smart supplier invests in understanding its customers; and smart, innovative customers take the trouble to understand the market they’re in and how a smart, innovative supplier can help them. They encourage and welcome useful engagement.
That means transparency and trust, two things that Australia’s business culture hasn’t always encouraged; for some reason, Australian industry and academia haven’t always embraced collaboration, and the Defence acquisition system’s need for probity doesn’t help because it deliberately maintains an arm’s length relationship with industry. All players need to learn how to trust. Remember the ‘collaboration’ bit earlier? You don’t collaborate without trust, and you don’t innovate if you can’t collaborate. That’s the cultural reality.

Sunday, September 1, 2019

Making yourself ready to innovate

Australian Defence Magazine published the second of my innovation columns in August. Its title was 'How prepared are you to innovate?' and it's about the structure that an organisation needs if it is to be innovative and responsive to what's happening around it. It's reproduced below, with a couple of minor additions.

Thanks to ADM Editor Katherine Ziesing once again for the opportunity.

How prepared are you to innovate?

INTRO: Facilitators ready? Bean bags primed? Whiteboards clean, bright and slightly oiled? Stop! As you were! 
Gregor FergusonSydney
‘Innovation’ is almost a buzz-word: it’s one of those things that’s hard to define, to the point that trying to create a single definition to cover all circumstances is simply pointless. 
Understanding that Innovation is about change is important. Creating an Innovation Culture is important. Engaged leadership is really important. But how do you configure an organisation to exploit that innovation culture and leadership? 
The organisation that you run or work for is (or should be) configured for the business you’re in. You might be manufacturing a product (guided missiles, or sugary cakes), or delivering a service (as an MSP contractor, or delivering flowers, or running a government department), or running an air force. 
The business you’re in will determine your structure and size, but to be innovative you need also to honour the principles of leadership, subject matter expertise and customer awareness as well as the willingness to pursue and embrace change.
Whatever your business, the same four fundamentals apply: Self-Awareness; Situational Awareness; Professional Mastery; and Business Mastery (or Leadership).
Self Awareness is about the innovator’s ‘internals’ – what he’s capable of, and what he needs to change if he wants to do more, or do something quite different. It’s an internal quality control system and it’s vital.
Situational Awareness is all about the ‘externals’: what is happening externally that may force a change, or that might present an opportunity? What is happening with technology, or the economy, or market conditions, or customer behaviour? 
The two feed each other. The innovator’s Situational Awareness determines his ability to expose and identify threats and opportunities; the innovator’s Self Awareness will shape his ability to respond. 
The actual response to those opportunities and threats will be conditioned, and possibly determined, by the innovator’s Professional Mastery.  
No person or organisation exists in a vacuum: whether we’re talking about a charity, a government department, an elite sportsman, a star entertainer or a manufacturing company, the innovator’s activities almost always centre around a specialist domain in which he is (or should be) the subject matter expert – this is Professional Mastery. 
For the ADF it is the ability to generate and apply military power at the behest of the elected government (its ‘customer’): every aspect of training men and women and operating equipment to the highest levels of proficiency. For the manufacturer, it is the technology embodied in his products and services that make them saleable, and the manufacturing techniques and enabling technologies that allow the players in this market to survive and flourish. 
The relevance of your Professional Mastery, and the professional and technical standards you need to achieve, are informed by your Situational Awareness and Self Awareness. The organisation’s leaders and the internal culture they help create will determine how welcome and valued each attribute is within the organisation. Good managers will also create the internal processes and mechanisms and nurture the skills and specialist expertise necessary to exploit the insights they gather. 
This is the bedrock of enterprise-level innovation and it’s what Business Mastery is all about: the ability to maintain an organisation’s openness to change, on the one hand, while managing its everyday activities as efficiently and economically as possible, while also developing timely responses to threats and opportunities. This embraces business management, administration, human resources and strategic planning. And innovation. This applies to the lone innovator as much as it does to a large, complex organisation.
The mutual dependence of Self AwarenessSituational AwarenessProfessional Mastery and Business Mastery can be shown in a simple diagram:

Their relative importance will wax and wane as an organisation passes through the business cycle. All are essential, but Business Mastery will help determine where the balance needs to be struck at any one time.
Don’t laugh, but the ADF gets this and Defence as a whole is slowly catching up. What government organisations struggle with, however, is an innovation culture at odds with a conservative, hierarchical tradition of top-down management and caution over policy development and the expenditure of public funds. Industry and academia enjoy a freedom that public organisations don’t, so have fewer impediments to embracing innovation – if their leadership and culture allow.

Defence Innovation - catching on

I've been writing a series of columns for Australian Defence Magazine on innovation in the defence community - not sector, but community - that word's important because successful innovation doesn't happen in isolation: it needs effective engagement between the innovator and the end-user, so industry needs Defence if it is to innovate successfully while Defence needs to understand what it needs to do and how industry and research sector innovators can help it achieve that. This is a community wide challenge.

 The ADM columns can be found here: https://www.australiandefence.com.au

Meanwhile, here's the first of those columns, published back in July - my thanks to ADM's Editor,  Katherine Ziesing, for allowing me the space and freedom to write this.

Defence innovation catching on 

INTRO: Defence is serious about innovation. Industry needs to share the journey, and help where necessary.
Gregor FergusonSydney
The 2016 Defence White Paper and Defence Industry Policy Statement broke new ground in Australia by enshrining industry as a Fundamental Input to Capability, and by committing to an ongoing investment in defence industry innovation and development. 
The DIPS quotes the then-Chief of Army, now CDF, General Angus Campbell: “Our operations in Afghanistan, and elsewhere over recent years, remind us that if we don’t innovate we won’t sustain an advantage over a future adversary – war can be very Darwinian.” 
The DWP is blunt: “The Government’s approach to Australian defence industry and innovation policy aims to maximise the defence capability necessary to achieve the Government’s defence strategy supported by an internationally competitive and innovative Australian industrial base. The focus will be on the small to medium enterprises that are the incubators for advanced defence capability in Australia.” 
There’s logic behind Defence’s embrace of industry policy and innovation: the high-technology defence sector delivers a very high pay-off for both Defence and industry innovators.
So what is innovation? There’s no Defence-endorsed official definition as yet. The Aerospace Maritime Defence and Security Foundation of Australia, organiser of the Pacific 2019 Innovation Awards, says ‘An innovation can be defined very broadly as a new idea that gets adopted and used; it’s an all-new product or service that solves an identified problem or saves somebody a lot of money, or that creates an opportunity for the user to do something important that he couldn’t before.’
Different parts of Defence are running with this broad definition. The three services, DST and the Chief Information Officer’s Group, CIOG, are heavily focussed on technology capability innovation and so this definition shapes their interface with industry. The rest of the organisation, however, also has a mandate to be more efficient, an innovation push encouraged by Defence’s First Principles Reform program. 
But there’s a definite limit to what innovators can change and achieve in any of the public agencies and departments. Public service regulations and guidelines on spending taxpayers’ money are rightly determined by probity and caution. This is famously antithetical to successful innovation, which is all about embracing risk and exploring uncertainties while pursuing a better outcome, faster. 
One answer to this contradiction lies in programs such as the RAAF’s Plan Jericho. This ‘seeds’ promising technologies and projects and so de-risks them significantly while helping the RAAF plan its own future direction before serious money gets spent on acquiring new equipment. Recent ‘smart buyer’ changes within Defence mean this approach might deliver a better outcome faster and without sacrificing probity – look at Project Land 19 Ph.7B. 
Defence’s stated policy goal is to develop “an internationally competitive and innovative Australian industrial base”. Its challenge is to foster innovation by the SMEs, in particular, and then determine a mechanism for ensuring the results are incorporated efficiently into capital equipment acquisition, upgrade and sustainment programs. The Defence Innovation Hub and Next Generation Technologies Fund (NGTF) are paths on that journey.
Industry R&D and innovation is essential to develop new products and services; industry also needs to refresh business skills and processes regularly to become more efficient and competitive, domestically and in export markets. Situational awareness is vital: industry needs to understand in some detail what Defence users need, as well as its own strengths and weaknesses in the market - Defence must be part of this process. Many SMEs already do this instinctively, calling it creativity, lateral thinking or continuous improvement and not realizing (or caring) that this is part of the innovation process.
Australia’s defence industry is abnormally polarised between a small number of foreign-owned prime contractors and a large number of indigenous SMEs. A policy focus on the SMEs’ capacity for agility and innovation is understandable. But big, hairy, ambitious projects need lots of money and people. Designing new combat aircraft, warships and submarines requires massive R&D investment by prime contractors and government research agencies. 
That’s why SMEs are lower-tier players: their contributions are vital, but they are necessarily in niche technology areas. This means their customers are often other companies higher up the supply chain. Innovation for the SMEs is as much about developing their technology and product base as it is about making them more competitive and sustainable as businesses. 
Defence and government have a key role here. There’s a collective win-win if Australia gets this right. ADM will explore this theme further next month